Mining shares are weaker after Glencore Xstrata decided to suspend production at an Australian mine following a plunge in coal prices.
The company said it was no longer financially viable to operate the Ravensworth underground mine - which produced 2.1m tonnes of coal last year - due to lower prices, higher costs, a strong Australian dollar and geological constraints. In a sell note analysts at Liberum said:
Companies are always reluctant to take capacity offline due to the additional costs incurred (redundancies, fixed costs etc) and the capital required to restart. [This move] implies Glencore's view on coal prices and ability to cut costs is weakening. Australian thermal coal prices at $72 a tonne are lowest they've been since November 2009.
Glencore is down 5.65p at 305.45p while Anglo America has fallen 29.5p to 1459.5, BHP Billiton has lost 13p to £18.18 and Rio Tinto has dropped 58p to £32.46.
